Proposal looks to lower cost, boost development

SB 6417 would allow counties and cities within a certain population range to create voluntary housing opportunity zones near transit facilities that would waive certain fees and local property taxes for residential developments. The bill received a “do pass” recommendation last week from the Senate Committee on Local Government. Photo: openclipart.org

It appears that rapid growth in the Puget Sound region is posing some math story problems at the state level.

Back in 2016, the state Office of Financial Management (OFM) offered varying population estimates for Washington in 2040. It only took one year to exceed the low estimate of 100,000 by 22,000 people. However, the fast-paced growth is primarily confined to the Interstate 5 corridor, where housing supply is far behind demand. Also, the low residential density could present problems for regional mass transit projects slated to open in the coming decades.

Proponents of SB 6417 want to change the equation by encouraging high-density development near transit centers. The bill would allow cities and counties with 700,000-800,000 people to submit to the state Department of Commerce plans for housing opportunity zones, which would exempt those residences from various local fees normally associated with construction. These zones would have to be located within half mile of a transit facility.

Under the state Growth Management Act (GMA), cities and counties can charge fees for the following:

public streets and roads;

public parks and recreation facilities;

schools; and

fire services.

Under SB 6417, projects in a housing opportunity zone would be exempt from these fees, along with mitigation fees associated with the State Environmental Policy Act (SEPA) review process. The developments would also be eligible for a multifamily tax exemption (MFTE), making them exempt from local property taxes for 8-12 years. The Department of Commerce would submit an annual report on these zones.

The prime sponsor of the bill is Sen. Guy Palumbo (D-1), who has introduced other GMA-related bills this session to address population growth in districts like his, which is located near or along I-5. The lone cosponsor is Sen. Ann Rivers (R-18).

Preceding the public hearing was an update to a state report: “Road Map to Washington’s Future” by consultant Joe Tovar, who authored the update. The report found that most of the state’s growth since 1990 is confined to certain regions. At 2.5 million, it’s more than twice the combined populations of the cities of Seattle (686,000), Spokane (214,500) and Tacoma (206,100).

Meanwhile, the statewide housing supply isn’t keeping up, according to Paul Berendt with Holland Partners. He told panel members at the January 30 public hearing that “it’s no secret that Washington faces a growing housing access and affordability crisis.”

He added that the legislation would streamline permitting for multifamily housing, and in doing so “help reduce the upward pressure in prices. We need to provide innovative programs that incentivize the building of housing. We believe this will result in creating housing for working class people close to transit centers which will reduce traffic and increase the quality of life of people involved.”

Also supportive was Roger Valdez with Seattle for Growth. He told lawmakers that “zoning is a 20th century solution to a 19th century problem. It was intended to protect people where they lived from harmful uses nearby. But today zoning has become a tool used by local jurisdictions…to impose rules, regulations, limits, fees, taxes that constrain and suppress the development of more housing supply, which means prices go up.”

With Sound Transit light rail lines expected to appear in the next 20 years, Valdez warns that the current system “delivers people to a few hundred bungalows. More housing means more supply, which means better prices for consumers.”

However, Carl Schroeder warned panel members at the January 30 meeting that no city or county would voluntary opt for a program that deprives them of regulatory control. He is the government relations director for the Association of Washington Cities.

While supportive of ideas to increase transit-oriented density, he said the problem for local government is that “once you opt into this process, you lose the ability to charge impact fees, SEPA mitigation fees and most other charges.” Also, “If you don’t have one (MTEP), you have to establish a multifamily tax exemption program, which has fiscal consequences.”

SB 6417 has now been referred to Ways and Means, but no public hearing has yet been scheduled.